On January 1, 2020, Seabreeze Construction Company owned 4 dump trucks, 2 excavators and other construction machinery with a total value of $950,000. During 2020, Seabreeze Construction bought two new trucks paying a total of $120,000. On December 31, 2020, the market value of all the firm's trucks and construction machinery was $1,020,000. 1) What was Seabreeze’s gross investment in 2020? 2) What was the amount of depreciation in 2020? 3) What was the net investment in 2020?
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On January 1, 2020, Seabreeze Construction Company owned 4 dump trucks, 2 excavators and other construction machinery with a total value of $950,000. During 2020, Seabreeze Construction bought two new trucks paying a total of $120,000. On December 31, 2020, the market value of all the firm's trucks and construction machinery was $1,020,000.
1) What was Seabreeze’s gross investment in 2020?
2) What was the amount of
3) What was the net investment in 2020?
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